Inflation is the sustained rise in the general price level of goods and services in an economy, which erodes the purchasing power of money over time. When inflation runs at 5%, the same basket of goods costing $1,000 this year will cost $1,050 next year and roughly $1,629 in ten years. The mechanism behind this is a persistent imbalance: too much money chasing too few goods. Whether that imbalance originates from booming consumer demand, rising production costs, or governments expanding the money supply, the result is the same -- sustained upward pressure on prices across the economy.
Inflation is not simply a number on a government report. It is a tax on savings, a redistribution of wealth from lenders to borrowers, a pressure on wages, and a force that affects every financial decision from grocery shopping to retirement planning. Moderate inflation -- around 2% annually -- is considered healthy by most central banks because it encourages spending and investment, discourages hoarding cash, and provides a buffer against deflation (falling prices), which historically coincides with severe recessions and economic stagnation. But when inflation runs high or becomes unpredictable, it imposes real costs on businesses, households, and the stability of entire economies.
"Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output." -- Milton Friedman, The Counter-Revolution in Monetary Theory (1970)
Friedman's famous dictum captures a core truth, though modern economics has added substantial nuance. This article explains how inflation is measured, what causes it, how central banks respond, what hyperinflation looks like when the mechanism runs out of control, and what concrete options individuals have to protect their financial position when prices are rising.
Key Definitions
Before examining the mechanics of inflation, several foundational terms require clear definition:
CPI (Consumer Price Index): A measure of the average change in prices paid by urban consumers for a representative basket of goods and services. The primary measure of consumer-level inflation in the United States, published monthly by the Bureau of Labor Statistics.
PPI (Producer Price Index): A measure of average changes in prices received by domestic producers for their output. Often considered a leading indicator of future consumer price changes, since rising production costs typically flow through to retail prices with a lag.
Purchasing power: The quantity of goods and services that a unit of currency can buy. Inflation directly reduces purchasing power -- a dollar that bought a loaf of bread in 2000 buys roughly half a loaf in 2024.
Real interest rate: The nominal interest rate minus the inflation rate. If your savings account earns 2% and inflation is 4%, your real return is -2% -- you are losing purchasing power despite the account balance growing. Understanding this distinction is essential for every investment decision and savings strategy.
Monetary policy: Actions taken by a central bank (such as the Federal Reserve in the US, the European Central Bank in the eurozone, or the Bank of England) to manage inflation and economic stability, primarily through adjusting interest rates and controlling the money supply.
Velocity of money: The rate at which money changes hands in the economy. Even with a constant money supply, faster velocity can produce inflationary pressure as the same dollars are spent more frequently.
How Inflation Is Measured
The Consumer Price Index (CPI)
The CPI is calculated monthly by the US Bureau of Labor Statistics (BLS), an agency established in 1884. BLS economists and data collectors survey approximately 80,000 prices across 200 categories spanning housing, food, transportation, medical care, education, apparel, recreation, and other goods and services. These prices are collected from roughly 23,000 retail and service establishments and 43,000 rental housing units across 75 urban areas.
Each category is weighted by how much the average urban household spends in that area. Housing (including rent and owners' equivalent rent) receives the largest weight, currently around 32-33% of the total index. Transportation accounts for roughly 16%, food about 14%, and medical care about 8%. These weights matter enormously: a 10% increase in housing costs has far more impact on measured inflation than a 10% increase in apparel prices.
The BLS calculates the percentage change in the total cost of this basket compared to a base period. The 12-month change gives the annual inflation rate. Core CPI excludes food and energy prices, which are highly volatile due to weather, geopolitical events, and commodity market dynamics, to provide a cleaner signal of underlying price trends that monetary policymakers rely on for decision-making.
CPI Criticisms and Adjustments
The CPI has legitimate critics, and understanding their arguments matters for interpreting inflation data accurately.
The substitution bias problem: when beef prices rise sharply and consumers buy chicken instead, their actual cost of living does not rise as much as the CPI suggests if the index does not account for this behavioral substitution. The BLS partially addresses this through the chained CPI (C-CPI-U), which uses a formula that reflects changing consumption patterns. The chained CPI consistently runs about 0.2-0.3 percentage points below the standard CPI.
Quality adjustment is also contested. When a new laptop costs the same as last year's model but has twice the processing power, BLS statisticians apply hedonic adjustments to account for the quality improvement, reducing the measured price increase. Critics like economist John Williams of ShadowStats argue that these adjustments systematically understate true inflation; mainstream economists counter that ignoring quality improvements would produce equally misleading results in the opposite direction.
Housing measurement presents particular challenges. The CPI uses owners' equivalent rent -- an estimate of what homeowners would pay to rent their own homes -- rather than home purchase prices or mortgage payments. This methodology smooths out the volatility of housing markets but can lag behind rapid changes in actual housing costs. During the 2020-2022 housing boom, the CPI captured housing inflation with a substantial delay, understating the cost pressures that new buyers and renters experienced in real time.
PPI as a Leading Indicator
The Producer Price Index measures prices at the producer and wholesale level before goods reach consumers. When manufacturing input costs -- steel, chemicals, energy, labor, shipping -- rise, companies typically pass those costs downstream with a delay of weeks to months.
During 2021-2022, PPI rose dramatically ahead of CPI, signaling the supply chain disruption and commodity price inflation that later fed into consumer prices. PPI for final demand goods peaked at over 11% year-over-year in March 2022, providing a forward-looking window into inflationary pressures that CPI had not yet fully reflected. Monitoring PPI is standard practice for economists, central bankers, and investors seeking early warning of inflationary trends.
The PCE Deflator: The Fed's Preferred Measure
The PCE deflator (Personal Consumption Expenditures price index), published by the Bureau of Economic Analysis, is the Federal Reserve's preferred inflation measure -- not the CPI. The PCE has a broader scope than CPI, covers a wider range of expenditures (including those paid on behalf of consumers, such as employer-provided health insurance), and uses spending weights that update more frequently, making it more responsive to changing consumption patterns.
The PCE typically runs 0.2-0.5 percentage points below CPI due to methodological differences, which is one reason the Fed's 2% inflation target sounds lower than the CPI-based inflation numbers that dominate media coverage.
The GDP deflator measures price changes for all domestically produced goods and services, providing the broadest inflation measure but updated only quarterly and less relevant for household-level analysis.
Types of Inflation: A Comparison
| Type | Primary Cause | Historical Example | Central Bank Response | Typical Duration |
|---|---|---|---|---|
| Demand-pull | Excess consumer/government demand | US 2021-2022 stimulus spending | Raise interest rates | Months to years |
| Cost-push | Rising input costs (energy, wages, materials) | 1973 OPEC oil embargo | Limited; supply-side solutions needed | Months to years |
| Built-in (wage-price spiral) | Expectations and wage-price feedback loops | United Kingdom 1970s | Anchor expectations aggressively | Years |
| Monetary | Excess money supply growth | Weimar Germany 1923 | Reduce money supply drastically | Rapid escalation if unchecked |
| Imported | Currency depreciation raising import costs | Argentina recurring crises | Currency stabilization measures | Ongoing while currency weak |
| Asset price | Excess demand for financial/real assets | US housing bubble 2003-2007 | Macroprudential policy | Until bubble deflates |
| Deflation | Excess supply, demand collapse | Japan 1990s-2010s ("Lost Decades") | Lower rates, quantitative easing | Decades if entrenched |
Most real-world inflation episodes combine multiple types simultaneously, which is why policy responses are never straightforward.
The Causes of Inflation
Demand-Pull Inflation
Demand-pull inflation occurs when aggregate demand in the economy exceeds aggregate supply -- when consumers, businesses, and governments collectively try to buy more than the economy can produce at current prices. The classic formulation: "too much money chasing too few goods."
This type of inflation typically emerges during economic booms, when unemployment is low, wages are rising, consumer confidence is high, and credit is easy. The post-COVID US economy of 2021-2022 illustrated demand-pull dynamics with textbook clarity: massive fiscal stimulus (three rounds of government payments totaling approximately $800 billion in direct transfers, plus expanded unemployment benefits and child tax credits), accumulated household savings from lockdown-suppressed spending, and pent-up demand for services all collided with supply constraints. CPI reached 9.1% in June 2022 -- a 40-year high.
Research by Olivier Blanchard and Ben Bernanke (2023), published through the Brookings Institution, decomposed the 2021-2023 inflation into its demand and supply components. They found that supply shocks (particularly energy and food prices, driven by the Ukraine war and COVID disruptions) accounted for the bulk of the initial surge, but demand-side pressures from fiscal stimulus sustained the inflation longer than supply shocks alone would have.
Cost-Push Inflation
Cost-push inflation occurs when the costs of production rise and businesses raise prices to protect margins, regardless of whether demand has increased. The most consequential examples in modern history involve energy:
The 1973 OPEC oil embargo: Arab oil-producing nations cut production and embargoed exports to countries supporting Israel in the Yom Kippur War. Oil prices quadrupled from roughly $3 to $12 per barrel. Because energy is an input to virtually everything -- manufacturing, transportation, heating, agriculture -- the price shock propagated through the entire economy. US CPI inflation reached 12.3% in 1974.
The 1979 Iranian Revolution: Oil production from Iran, then the world's second-largest exporter, collapsed during the revolution. Oil prices doubled again. Combined with loose monetary policy, this triggered stagflation -- the toxic combination of high inflation and economic stagnation that conventional economic theory said should not coexist.
COVID-19 supply chain disruptions (2020-2022): Global supply chains, optimized for efficiency rather than resilience, broke down simultaneously across shipping, semiconductors, raw materials, and labor. The cost of shipping a container from Shanghai to Los Angeles rose from roughly $2,000 in early 2020 to over $20,000 at the peak in late 2021. These costs flowed through to consumer prices with a lag of three to nine months.
Understanding cost-push dynamics is essential because they respond poorly to the standard central bank tool of raising interest rates. You cannot fix a supply shortage by reducing demand -- you can only suppress the economic activity that the shortage has not already suppressed. This is why fiscal policy and supply-side interventions matter alongside monetary policy.
Built-In Inflation: The Wage-Price Spiral
Built-in inflation occurs when past inflation becomes embedded in expectations, creating a self-reinforcing cycle. The mechanism works as follows:
- Prices rise (from any initial cause)
- Workers demand higher wages to maintain purchasing power
- Businesses raise prices to cover higher labor costs
- Workers demand still higher wages to keep up with the new, higher prices
- The cycle continues, potentially accelerating
The United Kingdom in the 1970s experienced a severe wage-price spiral. Powerful trade unions negotiated wage increases exceeding productivity growth. Businesses passed costs through to prices. Inflation reached 24.2% in 1975. The spiral was not broken until the Thatcher government confronted unions directly and the Bank of England, following the Federal Reserve's lead, pursued aggressive monetary tightening.
Modern central banks obsess over inflation expectations precisely because of this mechanism. If businesses and workers expect 2% inflation, they set prices and wages accordingly, and inflation tends to settle near 2%. If they expect 5%, the same self-fulfilling dynamic pushes inflation toward 5%. Research by economists Michael Woodford (2003) and Jordi Gali (2008) formalized the role of expectations in modern macroeconomic theory, showing that a central bank's credibility in its commitment to price stability is itself a powerful anti-inflationary tool.
Monetary Inflation
Milton Friedman's monetarist framework holds that sustained inflation is fundamentally a monetary phenomenon: when the money supply grows faster than economic output, the result -- with a lag of roughly 12-18 months -- is higher prices. His historical analysis with Anna Schwartz in A Monetary History of the United States, 1867-1960 (1963) demonstrated that every major inflation and deflation episode in American history was preceded by corresponding changes in money supply growth.
While the strict monetarist framework has been refined and partially superseded by modern central banking practice (the relationship between money supply measures and inflation has loosened since the 1980s), the core insight remains valid for extreme cases. Every hyperinflation in recorded history has involved dramatic money supply expansion by governments unable to fund spending through taxation or borrowing.
How Central Banks Fight Inflation
The Interest Rate Mechanism
The primary tool central banks use to fight inflation is raising the benchmark interest rate -- in the US, the federal funds rate, which is the target rate at which banks lend reserves to each other overnight. When the Fed raises this rate, borrowing costs across the economy increase: mortgage rates rise, business loan rates rise, credit card rates rise, auto loan rates rise.
Higher borrowing costs work to reduce inflation through multiple channels:
- Reduced consumer spending: Higher mortgage and auto loan rates reduce demand for housing and vehicles -- the two largest consumer purchases
- Reduced business investment: A higher cost of capital makes more investment projects unprofitable at the margin, reducing demand for materials and labor
- Stronger currency: Higher interest rates attract foreign capital seeking better returns, strengthening the dollar, which makes imports cheaper and reduces imported inflation
- Wealth effects: Higher rates reduce asset prices (stocks typically fall, real estate cools), making households feel less wealthy and reducing discretionary spending
- Credit tightening: Banks become more cautious about lending when rates are high and default risk increases
The Federal Reserve tightening cycle of 2022-2023 provided a dramatic real-time example. The Fed raised the federal funds rate from near zero (0-0.25%) to over 5.25% (5.25-5.50%) in the sharpest tightening in four decades -- eleven rate increases in 16 months. CPI fell from over 9% in June 2022 to below 3% by mid-2023 without triggering the severe recession many economists had predicted, in what became known as the "soft landing" debate.
The 2% Target: Why That Number?
Most modern central banks target approximately 2% annual inflation. This target, first adopted by New Zealand's Reserve Bank in 1990 and subsequently adopted by the Fed (formally in 2012), the ECB, the Bank of England, and most other major central banks, is not arbitrary.
The 2% target balances several considerations:
- Low enough to preserve the value of money and allow businesses and households to plan without constant price anxiety
- High enough to reduce the risk of deflation, which is far harder to escape than moderate inflation
- High enough to provide the central bank room to cut real interest rates in a downturn -- if inflation is 2% and the nominal rate is 4%, the real rate is 2%; the central bank can cut to zero and still achieve a real rate of -2%, stimulating the economy. With zero inflation, this flexibility disappears.
Some economists, including Olivier Blanchard (2010), former chief economist of the IMF, have argued for raising the target to 3-4% to provide more policy room. The debate intensified after the 2008 financial crisis, when central banks found themselves at the zero lower bound with limited conventional tools available.
The Risk of Over-Tightening
Raising rates too aggressively risks causing a recession -- curing the disease by killing the patient. The canonical example is Paul Volcker's Federal Reserve, which raised the federal funds rate to nearly 20% in June 1981 to break the entrenched inflation of the 1970s.
It worked: inflation fell from over 13% to under 5% within two years. But the cost was the deepest recession since the Great Depression, with unemployment peaking at nearly 10.8% in November 1982. Manufacturing sectors were devastated. The farm crisis of the early 1980s, driven partly by high interest rates that crushed agricultural land values, produced the largest wave of farm bankruptcies since the 1930s.
The challenge for central banks is threading the needle between crushing inflation and inflicting excessive economic damage -- what economists call the "sacrifice ratio": the amount of GDP that must be given up for each percentage point reduction in inflation. Research by Laurence Ball (1994) at Johns Hopkins found that sacrifice ratios vary significantly across countries and episodes, depending on the credibility of the central bank, the flexibility of the labor market, and whether inflation expectations have become entrenched.
Hyperinflation: When the System Breaks Down
Hyperinflation is conventionally defined as inflation exceeding 50% per month (a threshold proposed by economist Phillip Cagan in his 1956 study). It represents a complete breakdown of monetary trust -- the point at which a currency ceases to function as a store of value and economic activity reverts to barter, foreign currencies, or commodity exchange.
The Weimar Republic, 1921-1923
Germany's hyperinflation is the canonical example of monetary breakdown. Following World War I, Germany was burdened with enormous war reparations under the Treaty of Versailles -- initially set at 132 billion gold marks (roughly $33 billion in 1921 dollars). Unable to pay, the Weimar government printed money to meet obligations.
By November 1923, the exchange rate had collapsed from 4.2 marks per dollar in 1914 to over 4.2 trillion marks per dollar. Workers were paid twice daily and immediately spent their wages before prices rose again. A loaf of bread that cost 250 marks in January 1923 cost 200 billion marks by November. Restaurant patrons paid for their meal upon ordering, not upon finishing, because the price would be higher by the time they ate. The crisis destroyed the savings of the German middle class and contributed to the political radicalization that eventually brought the Nazi Party to power.
The crisis was resolved by the introduction of the Rentenmark in November 1923, a new currency backed by land and industrial assets rather than gold, accompanied by drastic fiscal reform and an end to money printing. Inflation stopped almost overnight -- demonstrating that hyperinflation, while devastating, can be ended rapidly when monetary credibility is restored.
Zimbabwe, 2007-2008
Zimbabwe's hyperinflation reached an estimated 89.7 sextillion percent (89.7 x 10^21) per year by November 2008, according to calculations by economist Steve Hanke at Johns Hopkins using purchasing power parity methodology. At the peak, prices were doubling every 24.7 hours.
The government under Robert Mugabe had been printing money to fund a violent land redistribution program that destroyed commercial agriculture, cover budget deficits, and finance military operations in the Democratic Republic of Congo. Agricultural output collapsed as experienced farmers were displaced; manufacturing followed. The Zimbabwe dollar became worthless -- the country ultimately abandoned its currency entirely and dollarized its economy in 2009, adopting the US dollar and South African rand as legal tender.
Venezuela, 2016-Present
Venezuela's inflation crisis developed after oil prices collapsed in 2014, devastating the oil-dependent government's revenue (petroleum accounted for over 95% of export earnings). Price controls, currency controls, and continued money printing to fund social programs created a spiral that the government denied for years. By 2018, IMF estimates put annual inflation at over 1 million percent. The bolivar lost virtually all value. An estimated 7.7 million Venezuelans (roughly 25% of the population) fled the country by 2023, according to the UN's R4V platform.
The Common Thread
Every hyperinflation in recorded history shares a pattern: governments with no credible commitment to monetary discipline, printing money to cover spending gaps that taxation and borrowing cannot fill. The trigger varies -- war reparations, agricultural collapse, oil revenue loss -- but the mechanism is always the same: the money supply expands exponentially while the productive capacity of the economy contracts or stagnates, and public trust in the currency evaporates.
Understanding what money actually is -- a social technology that depends entirely on collective trust -- makes hyperinflation episodes intelligible rather than mysterious.
What Individuals Can Do About Inflation
Assets That Historically Outpace Inflation
Equities (stocks): Well-managed companies can raise prices to protect margins, and their revenues tend to grow with the nominal economy. Over long periods, US equities have returned approximately 7% per year above inflation, according to data compiled by Jeremy Siegel in Stocks for the Long Run (6th edition, 2022). Stocks are volatile in the short term -- they lost over 50% in 2008-2009 -- but remain among the most reliable long-term inflation hedges for patient investors.
TIPS (Treasury Inflation-Protected Securities): US government bonds whose principal adjusts upward with CPI changes. TIPS guarantee a positive real return over their lifetime. They are particularly valuable for investors who need inflation protection with near-zero default risk -- retirees living on fixed income, for example.
I Bonds: Series I savings bonds offered by the US Treasury pay a composite rate that includes a fixed rate plus an inflation component tied to CPI, adjusted every six months. Limited to $10,000 per year per person (plus $5,000 via tax refund), they provide full inflation protection with zero default risk and are exempt from state and local taxes.
Real estate: Property typically appreciates over time at rates that reflect or exceed inflation, and rental income can be adjusted to current market conditions. Real estate investment trusts (REITs) provide exposure without direct property ownership. However, real estate is illiquid, management-intensive, and geographically concentrated -- not a passive inflation hedge.
Commodities: Physical commodities (oil, metals, agricultural products) tend to rise in price during inflationary periods, since inflation is often partially driven by commodity price increases. However, commodities produce no income, storage is costly, and long-term returns are volatile and inconsistent. For most individual investors, commodity exposure through diversified funds is preferable to direct commodity investment.
What to Avoid During High Inflation
Cash in low-yield accounts loses real value at the inflation rate. If inflation is 5% and your savings account earns 1%, you are losing 4% of purchasing power annually. During the 2021-2023 inflation surge, Americans held over $4 trillion in savings accounts earning well below the inflation rate -- an enormous aggregate wealth transfer.
Fixed-rate long-term bonds lock in a nominal yield that may fall well below future inflation rates, producing negative real returns. Bond investors suffered historic losses during the 2022 rate hiking cycle: the Bloomberg US Aggregate Bond Index lost over 13% in 2022, its worst year in recorded history.
Variable-rate debt becomes more expensive as central banks raise rates to fight inflation. Carrying high levels of variable-rate debt (adjustable-rate mortgages, variable business loans, credit card balances) during a tightening cycle significantly increases financial vulnerability. Understanding how to manage debt during inflationary periods is a critical defensive skill.
Practical Takeaways
Understand real versus nominal returns. The number that matters for purchasing power is not what an investment earns, but what it earns above inflation. A savings account yielding 4% during 5% inflation is losing ground. A stock portfolio returning 10% during 3% inflation is gaining 7% in real terms.
Own inflation-resilient assets for the long term. Equities, real estate, and inflation-linked bonds all provide better long-term protection than cash. The specific allocation depends on your time horizon, risk tolerance, and income needs -- but holding large cash positions during inflationary periods is the most reliably wealth-destructive strategy available.
Pay attention to real wages. If your salary is not rising at least as fast as CPI, you are accepting a real pay cut even if the nominal number on your paycheck appears stable or growing. Research by the Economic Policy Institute found that real wages for the median American worker grew by only 0.3% per year from 1979 to 2019, compared to productivity growth of 1.5% per year -- a divergence that represents trillions of dollars in cumulative income that flowed to capital owners rather than workers.
Index-linked instruments matter for risk-averse investors. TIPS and I Bonds are particularly valuable for people building emergency funds or approaching retirement who cannot afford significant real-value losses. They will not make you wealthy, but they will preserve what you have.
Inflation is a tax on financial ignorance. Those who understand inflation adjust their behavior -- negotiating raises, investing in real assets, avoiding cash drag, using TIPS and I Bonds. Those who do not understand it pay the tax silently, year after year, through the erosion of savings they worked hard to accumulate.
References and Further Reading
- Friedman, M. (1970). The Counter-Revolution in Monetary Theory. Institute of Economic Affairs.
- Friedman, M., & Schwartz, A. J. (1963). A Monetary History of the United States, 1867-1960. Princeton University Press.
- Bureau of Labor Statistics. (2024). CPI Detailed Report. US Department of Labor. https://www.bls.gov/cpi/
- Bureau of Labor Statistics. (2024). Producer Price Indexes. US Department of Labor. https://www.bls.gov/ppi/
- Blanchard, O., & Bernanke, B. (2023). What Caused the U.S. Pandemic-Era Inflation? Brookings Papers on Economic Activity. https://www.brookings.edu/articles/what-caused-the-u-s-pandemic-era-inflation/
- Hanke, S. H., & Krus, N. (2012). World Hyperinflations. In Parker, R. & Whaples, R. (Eds.), The Handbook of Major Events in Economic History. Routledge.
- Volcker, P. A., & Harper, C. (2018). Keeping At It: The Quest for Sound Money and Good Government. PublicAffairs.
- Siegel, J. J. (2022). Stocks for the Long Run (6th ed.). McGraw Hill.
- Fisher, I. (1933). The Debt-Deflation Theory of Great Depressions. Econometrica, 1(4), 337-357.
- Woodford, M. (2003). Interest and Prices: Foundations of a Theory of Monetary Policy. Princeton University Press.
- Ball, L. (1994). What Determines the Sacrifice Ratio? In N. G. Mankiw (Ed.), Monetary Policy. University of Chicago Press.
- Cagan, P. (1956). The Monetary Dynamics of Hyperinflation. In M. Friedman (Ed.), Studies in the Quantity Theory of Money. University of Chicago Press.
- US Treasury. (2024). Treasury Inflation-Protected Securities. https://www.treasurydirect.gov/marketable-securities/tips/
- Federal Reserve Board. (2024). Monetary Policy Report to Congress. https://www.federalreserve.gov/monetarypolicy/mpr_default.htm
Frequently Asked Questions
What is inflation and how does it work?
Inflation is the sustained rise in the general price level, meaning each dollar buys less over time. It happens when too much money chases too few goods — driven by excess demand, rising production costs, or money supply growth.
What is the difference between CPI and PPI?
CPI measures prices households pay for consumer goods; PPI measures prices producers receive at the wholesale level. PPI is a leading indicator — factory cost increases typically flow through to consumer prices with a lag of weeks to months.
How do central banks fight inflation?
By raising interest rates, which increases borrowing costs, reduces consumer spending and business investment, and slows demand. The Fed raised rates from near zero to over 5% in 2022-2023, bringing inflation from 9% back below 3%.
What causes hyperinflation?
Governments printing money to cover spending deficits when they cannot borrow or tax enough. Every historical hyperinflation — Weimar Germany 1923, Zimbabwe 2008, Venezuela 2010s — involved dramatic money supply expansion and collapse of currency credibility.
What can individuals do to protect themselves from inflation?
Own inflation-resilient assets: equities (companies can raise prices), TIPS (principal adjusts with CPI), I Bonds, and real estate. The worst response is holding large cash balances in accounts paying below-inflation rates.
